Will Internet service be treated like a utility?

The FCC will debate stronger net neutrality rules that would reclassify broadband as a telecommunications service

Published: February 03, 2015 04:00 PM

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For many of us, the Internet has become a utility—an indispensable service that connects us not only to friends and family, but also to information, entertainment, often our livelihoods, and to the world at large. But should it be regulated like a utility?

That's at the core of what's expected to be a heated discourse this week as the FCC prepares to circulate a draft of new proposed regulations for the Internet and net neutrality that calls for exactly that. Those in favor of treating the Internet as a utility believe that will help keep it open and competitive and result in better options and lower prices for consumers.

This morning, in an op-ed piece in Wired, FCC Chairman Tom Wheeler said that the plan he will submit to his fellow commissioners tomorrow will seek to reclassify Internet service providers as “common carriers” under Title II of the Communications Act. The full commission is expected to vote on the proposal on February 26.

That's a move that Consumer Reports has championed. "We believe the best way to ensure that the Internet remains open and affordable is through the FCC reclassifying the Internet as a public utility under Title II of the Communications Act," says Delara Derakhshani, policy counsel for Consumers Union, the policy and advocacy arm of Consumer Reports.

If approved, the move would bring the FCC and Wheeler full circle, and more in line with President Obama’s stated preference for reclassification. In the interim, though, Congressional Republicans, now in the majority, are pushing legislation that while offering some net neutrality protections, would essentially strip the FCC of its authority to impose such regulations on Internet service providers. Derakhshani says that could weaken the FCC's authority to protect consumers. "By tying the FCC's hands, the proposed legislation could undermine the agency's ability to keep pace with changes in technology," she says.

What is “net neutrality”?

Net neutrality, a term coined by Columbia Law School professor Tim Wu in 2003, is the concept that all Internet traffic should be treated equally, without discrimination against certain traffic based on its source, destination, or message. Enforced net neutrality would prevent Internet service providers (ISPs) from giving preferential treatment to content they profit from, or slowing down—sometimes called throttling—traffic from content providers unable or unwilling to pay more for better or faster access. For example, your streaming experience wouldn't be better on Netflix than on Vudu or M-Go only because Netflix paid more to your ISP. It would also prevent an ISP from charging you more for certain products or services. Net neutrality falls under the larger concept of an open Internet, where all the Internet’s resources are available to everyone equally

Why all the attention right now?

The debate over the principle of net neutrality has been brewing for years; last January a court challenge by Verizon struck down the FCC’s previous net neutrality rules, essentially finding that the FCC lacked the authority to regulate broadband services. In the wake of that ruling, last April the FCC came up with new net neutrality rules that would have allowed cable and telecommunications companies to charge content companies, including Netflix, for so-called “fast lanes” with better, faster service for their customers. The FCC said that these types of deals would be allowed, provided the terms were “commercially reasonable.” [Note: This article was updated to clarify that these agreements were not part of so-called peering deals.-Ed.]

That decision, however, was met with strong criticism, not only from consumer groups—among them Consumers Union—but also from companies such as Netflix, one of the providers that had reached such deals, and Tumblr. Consumers Union's position is that by allowing ISPs to create “fast lanes”—which work like the Internet equivalent of a high-speed HOV lane for rush-hour commuters—for those companies that can pay the toll, the FCC is potentially creating a two-tiered system that favors larger players, stifling innovation by start-ups and smaller players who can’t afford to pay extra.

Some of those opposed to reclassification simply want less government regulation. But others, including the large cable and telcom companies, have argued that companies like Netflix, which do use large chunks of an ISP's bandwidth, should pay more to send content through an ISP's networks. If ISPs aren't able to charge more for that access, they argue, there's no incentive for them to invest in maintaining and upgrading their current infrastructure. And that could harm consumers, they claim. Not surprisingly, consumer groups disagree with those contentions.

What does Title II reclassification actually mean?

By reclassifying broadband as a telecommunications service, rather than an information service, under Title II of the Telecommunications Act of 1996, the FCC would regain the authority to regulate broadband service, treating it as a utility, much like gas, electricity, or landline telephones. This was actually how early Internet services were regulated. But in 2002 the FCC deemed "cable modem" service to be an interstate information service, and followed suit with wireless broadband in 2007, removing it from within Title II classification. The argument was that less regulation would result in lower prices and more choices for consumers.

But given the strong criticism against paid prioritization deals, reclassification is once again on the table. At CES, Wheeler said that since the earlier decision, the FCC studied the issue and came to realize that what’s commercially reasonable for an ISP isn’t necessarily what is reasonable for consumers or innovators. “That’s the wrong question, and the wrong answer,” he said during the interview. “Because the issue here is how do we make sure that consumers and innovators have access to open networks.”

Wheeler said that if broadband is reclassified under Title II, paid prioritization deals—along with throttling and blocking service—will be banned. However, it also appears that the FCC will use a lighter, less utility-like approach to other aspects of oversight, especially pricing decisions.

Could anything else be affected?

Yes. In his op-ed piece, Wheeler also said that he's proposing to fully apply these rules to mobile broadband. Another possibly significant, but separate, element related to the February 26th vote concerns development of municipal broadband networks, including public Wi-Fi, which is currently banned by several states, including Tennessee and North Carolina. The FCC could act to preempt these state laws, which prevent local governments from offering their own Internet services that would compete with private broadband providers. Based on recent comments, Wheeler appears to favor this approach. Proponents of municipal Wi-Fi believe it can help bring broadband to unserved and underserved communities, and will likely result in lower prices in regions where private and public alternatives coexist.

We expect more news about the FCC's proposal to start leaking out later this week after the draft is circulated to the full commission. Keep checking back for all our updates leading up to the final vote on February 26th.

—James K. Willcox

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